Richard J. Culp Case Studies

CASE STUDY NUMBER TWO:

IRS’ ABATEMENT OF EMPLOYMENT TAX, FORM 941, LATE FILING, LATE PAYMENT, AND DEPOSIT PENALTIES ASSESSED AGAINST MY CORPORATE CLIENT, ALONG WITH THE CONSEQUENT REDUCTION OF INTEREST, DUE TO THE CORPORATION’S BEING ABLE TO PROVE, WITH MY GUIDANCE, THAT REASONABLE CAUSE CRITERIA HAD BEEN MET FOR THOSE ABATEMENTS

SYNOPSIS:

The corporate client had retained the services of a certified public accountant (CPA) to perform bookkeeping and payroll services for the company. Those services included making timely Federal Employment Tax deposits and filing Federal Employment Tax Returns, Forms 941 and 940, in a timely manner.  Due to the CPA’s negligence, the tax deposits were not made, nor were the returns filed until a considerable period beyond their due date, which resulted in the IRS assessing the company for the taxes due and for the applicable penalties and interest.  The corporation’s case was ultimately turned over to an IRS Revenue Officer for disposition.

Consequently, the IRS threatened enforced collection action. The corporation retained an attorney to represent them, an attorney who, as it developed, was not very knowledgeable in IRS procedure.

I was retained by the corporate client when a mutual CPA acquaintance referred me to him. I interviewed the corporate president and his employees in depth. Then I reviewed all of their IRS and other relevant correspondence; ordered and reviewed all of the relevant IRS account transcripts; and conducted Collection Information Statement interviews, using IRS Forms 433-B for the corporation and 433-A for the applicable individuals. My analysis of all of the foregoing showed me that the corporation and the corporate officer responsible for the Trust Fund Recovery Penalty were able to make payments on the IRS tax, penalties, and interest arrearage, but, far more importantly, a case could be made for abatement of all of the penalties assessed against the corporation, in view of the CPA’s negligence.

The CPA, by his own admission to me, was negligent in his depositing and filing responsibilities. I prepared an affidavit attesting to his negligence, which he signed. With that affidavit in hand, I successfully made the case to the IRS Revenue Officer and the IRS Group Manager that all of the penalties should be abated, and the corresponding interest reduced.

See the client’s testimonial letter for his opinion of my performance on the corporation’s and his behalf. (Original testimonial letters are available for review by serious potential clients.)

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CASE STUDY NUMBER THREE:

IRS APPEALS OFFICER’S DETERMINATION THAT MY MALE CLIENT WAS AN “INNOCENT SPOUSE,” UPON BEING PROVIDED WRITTEN EVIDENCE TO SUPPORT HIS CLAIM OF INNOCENCE, AND UPON CONDUCTING A “FACE TO FACE” INTERVIEW WITH MY CLIENT, HIS WIFE (AT THE TIME), AND MYSELF

SYNOPSIS:

My client retained me to appeal the IRS’ preliminary determination that he was not entitled to relief under the relevant provisions of Internal Revenue Code (IRC) Section 6015. He retained me just prior to the expiration of the thirty day period for appeal of the denial. A mutual CPA friend had referred him to me.

His initial “innocent spouse” claim had been submitted on his behalf by an attorney who was not familiar with the procedural requirements nor the supporting evidence requirements of such a claim.

I interviewed, in depth, both my client and his spouse, with whom he was still married at the time, as to the basis for his claim to being an “innocent spouse.” Both he and his wife gave me the same reasons to support his claim. I was quite surprised that she was willing to testify on his behalf at the IRS Appeals Conference that I intended to request, once I established the necessary argument and assembled the necessary evidence.

They both provided to me the necessary supporting documents, including relevant affidavits. With these documents in hand, I prepared my formal Protest Letter, citing the facts of the case and the relevant provisions of IRC Section 6015, which, in my opinion, refuted the Government’s preliminary determination to deny my client relief from joint and several liability for the applicable tax periods. In my Protest Letter I requested an Appeals Conference with the presiding Appeals Officer.

In a subsequent telephone discussion with the presiding Appeals Officer, I was told that my client’s appeal would be denied. I insisted that we, i.e., my client, his wife, and myself, were entitled to a “face to face” interview, and asked the Appeals Officer not to make a final determination until that interview took place.  The Appeals Officer then granted an appointment for the “face to face” interview with us.

At that “face to face” Appeals Conference, even more facts were divulged to the Appeals Officer by my client and his wife. These additional facts, provided in the “face to face” interview, caused the Appeals Officer to determine that my client was, in fact, an “innocent spouse,” and granted him full relief from his joint and several liability for the tax periods in question.

See the client’s testimonial letter for his opinion of my performance on his behalf. (Original testimonial letters are available for review by serious potential clients.)

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CASE STUDY NUMBER FOUR:

UPON APPROPRIATE EVIDENCE BEING PRESENTED THE IRS REVENUE OFFICER DETERMINED THAT MY CLIENTS WOULD NOT BE HELD RESPONSIBLE FOR THE NOT YET ASSESSED TRUST FUND RECOVERY PENALTY PORTION (NEARLY $725,000) OF THEIR BANKRUPT CORPORATION’S UNPAID EMPLOYMENT TAX LIABILITY.

SYNOPSIS:

The principal client, who was the president of the bankrupt corporation, contacted me upon referral by a mutual CPA friend.  The client was under the mistaken impression that the Trust Fund Recovery Penalty (TFRP) had already been assessed against him, and had retained an attorney to represent him for the purpose of preparing and submitting an offer in compromise for that TFRP assessment. If that attorney did discover that the TFRP had not yet been assessed against my client, he did not inform my client of that fact, per my client.

Upon being retained, and upon receiving the IRS Powers of Attorney for both the corporation’s periods of Employment and Unemployment Tax liability, and for my client’s presumed TFRP liability, along with his and his wife’s filed and full paid Form 1040 liabilities, I discovered that no TFRP penalty had been assessed against him. I made this discovery when I requested and received the relevant IRS account transcripts for the corporate Employment and Unemployment Tax delinquent periods of liability, and the account transcripts for my clients’ Form 1040 filings. There was no record of any TFRP assessment against my client!

I then proceeded to conduct Form 4180 interviews with my client, his wife, his sister, and the former corporate counsel. The Form 4180 is a tool that IRS Revenue Officers use as an aid in determining who the responsible party, or parties, are for the purpose of recommending assertion of the TFRP, per the provisions of Internal Revenue Code (IRC) Section 6672. The principal determinant of responsibility is which party, or parties, in positions of responsibility within the corporation, including, but not limited to, corporate officers, had the authority to determine how corporate funds were disbursed, including federal tax payments! (I have access to Form 4180 through my subscription to CFS Audit and Collections, a tax forms program. I learned how to use Form 4180 during my years of experience as an IRS Revenue Officer, until I retired in 1995.)

The conclusion that I drew from my Form 4180 interviews was that the deceased father of the client and his sister was the responsible person. I asked for at least ten affidavits from persons within the bankrupt corporation in a position to attest to the deceased father’s responsibility. I received them. With these affidavits in hand, along with my Form 4180 interviews, I asked for a meeting with the IRS Revenue Officer assigned to the corporate case. When all the foregoing evidence was presented to her at our meeting, she made the determination that the deceased father was solely responsible for the TFRP.

See the client’s testimonial letter for his opinion of my performance on his and his sister’s behalf. (Original testimonial letters are available for review by serious potential clients.)

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CASE STUDY NUMBER FIVE:

CLIENTS WERE INCOMPENTENTLY REPRESENTED BY THREE CONSECUTIVE TAX REPRESENTATION COMPANIES, INCLUDING THE PREPARATION FOR SUBMISSION (BY THE CLIENTS) OF A PROCEDURALLY INCORRECT COMBINED CORPORATE AND INDIVIDUAL OFFER IN COMPROMISE, WHICH WAS REJECTED SUMMARILY BY THE INTERNAL REVENUE SERVICE; CLIENTS’ DEFUNCT AND INSOLVENT CORPORATE TAX CASE, PREVIOUSLY FOUND TO BE CURRENTLY NOT COLLECTIBLE BY AN IRS REVENUE OFFICER, REACTIVATED BY THE SUBMISSION OF THE PROCEDURALLY INCORRECT COMBINED OFFER IN COMPROMISE; IMPROPER LEVIES ISSUED BY IRS ACS AFTER I HAD REQUESTED A COLLECTION DUE PROCESS HEARING, WHICH HAD BEEN CORRECTLY REQUESTED AND DULY LOGGED IN BY ONE ACS UNIT (NOT THE ACS UNITS WHO SUBSEQUENTLY LEVIED UPON CLIENT’S WAGES)

SYNOPSIS:

The clients contacted me upon being referred to me by a mutual friend. They were desperate, having just received via certified mail approximately eighteen IRS CP 504 Notices, i.e., final notice and demand notices, regarding their defunct and insolvent corporation’s Employment and Unemployment Tax liability, and a Letter 1058, threatening imminent levy action regarding, I think, the wife’s Trust Fund Recovery Penalty (TFRP). The clients thought that the IRS was going to pursue even more enforced collection action against them, above and beyond an ongoing wage levy resulting from the previously assessed TFRP against the husband.

They were also under the impression that they were personally liable for the entire corporate liability, not just the TFRP. Their three previous tax representation companies failed to make them aware of the difference between corporate versus individual Employment Tax liability. Consequently, the clients had discussions with various IRS employees in other states, employees who also shed no light on the clients’ individual versus corporate tax liability. These IRS employees directed the clients to file an unnecessary Form 940 for a year during which the corporation was still operating, and file a Form 941 for a quarter that had already been assessed by the IRS. Those two returns, when filed, were then incorrectly assessed for the year in which they were filed, rather than for the year and the quarter in question. The IRS compounded mistake upon mistake, until we finally had the Collection Due Process Hearing that I had requested shortly after being retained. The Settlement Officer, who had previously been a field Revenue Officer, quickly grasped all of the mistakes that had occurred along the way, and she did her best to correct them.

The Settlement Officer released the ongoing wage levy on the client’s wages, and prepared a hybrid manually monitored installment agreement and payroll deduction agreement, which, if the successor IRS units had properly executed their duties, would have brought closure to my clients’ case, save for their making the applicable payments. But, once again, an incompetent IRS employee improperly levied upon my client’s wages, even though an installment/payroll deduction agreement was in place. It took weeks for me to resolve that problem. And it took many more weeks to finally have the corporate Employment and Unemployment tax liability declared Currently Not Collectible, due to its defunct and insolvent status.

As of this writing, the clients have full paid their TFRP liabilities, along with their Form 1040 liabilities, which had been included on the hybrid manually monitored installment and payroll deduction agreement.

See the clients’ testimonial letter for their opinion of my performance on their behalf with the various IRS units. (Original testimonial letters are available for review by serious potential clients.)

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CASE STUDY NUMBER SIX:

CLIENT CORPORATION’S EMPLOYMENT TAX, FORMS 941, FAILURE TO DEPOSIT, FAILURE TO PAY, AND LATE FILING PENALTIES WERE ABATED FOR REASONABLE CAUSE, AS WAS THE CORRESPONDING INTEREST ON THOSE PENALTIES.

SYNOPSIS:

The corporate president contacted me upon referral by an enrolled agent with whom I have worked together with on various tax delinquency cases. The corporate president and his accounting manager apprised me of the fact that an IRS Revenue Officer had made a visit to their business office to make demand on their very large Employment Tax liability.
The Revenue Officer had left them with a very large list of documents that he wanted the company to provide to him by a date certain.

The corporate president and the accounting manager explained to me that, unbeknownst to them, their payroll manager had serious health issues that impaired her judgment, resulting in her failure to make federal tax deposits, even though the corporation had ample funds in its payroll account to pay those taxes. The payroll manager also failed to timely file the Employment Tax, Form 941, returns in question.

I interviewed, in depth, all parties concerned, including the payroll manager, who had been removed from her position with the company. I made the determination that if the former payroll manager’s attending doctor would provide an affidavit attesting to the payroll manager’s health problems, and attesting to how those health problems had impaired her judgment to the point that she had not been functioning in a rational manner in the performance of her payroll management duties, then reasonable cause could be established for the abatement of the penalties that the IRS had assessed against the corporation. I did advise the accounting manager and the corporate president that any unpaid taxes only must be paid immediately, as the IRS would not consider penalties abatement until those taxes were paid. They agreed to do so. They also were able to secure the necessary affidavit from the former payroll manager’s attending doctor, an affidavit that attested to how the former payroll manager’s judgment had been impaired during the period the tax liability was accruing.

I also asked them to provide evidence that the funds necessary to pay the federal taxes when they were due were in the bank account at the time the payroll manager failed to make the relevant federal tax deposits. They did so. I contacted the IRS Revenue Officer and scheduled an appointment for him to meet with the corporate president, the accounting manager, and myself at the corporate offices.

When we all met at the corporate offices, and after the Revenue Officer reviewed all of the documents that both the corporate president and accounting manager provided to him, in addition to the formal abatement request letter and supporting documents that I provided to him, the Revenue Officer told us that he would recommend to his Group Manager that he agree to abate the penalties. The Group Manager did concur with the Revenue Officer’s recommendations, and he abated the penalties in question.   

 See the accounting manager’s testimonial letter for her opinion on how I performed with the IRS on behalf of the corporation’s payroll tax delinquencies. (Original testimonial letters are available for review by serious potential clients.)

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